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Asset Watch
Wednesday, October 11, 2023
The US dollar price experienced a decline following statements by some Federal Reserve members that lessened the likelihood of an interest rate hike at next month’s meeting, especially after a rise in US bond yields. Nonetheless, there’s continued anticipation in the markets due to geopolitical tensions in the Middle East, particularly concerns about the possibility of the ongoing conflict expanding to include Lebanese territories.
Today, markets are eagerly awaiting the release of the US Producer Price Index of September. Additionally, speeches by Federal Reserve members Waller and Bostic will be closely monitored. Investors are also keen on reviewing the minutes from the Federal Reserve meeting held in September to gain more clarity on the consensus among members regarding the central bank’s monetary policy.
The highlight of the week remains the US inflation report for September, scheduled for release tomorrow. This report will significantly influence the markets’ anticipation of the Federal Reserve’s decision at the next month’s meeting. A lower-than-expected data, especially concerning the core consumer price index (projected at 4.1%), would diminish the likelihood of an interest rate hike by the US Central Bank. Conversely, any higher-than-expected data will keep the door wide open for a 25-basis point interest rate increase, impacting the prices of the EUR/USD negatively.
Chart source ADSS Platform
On October 3, the EUR/USD fell to a multi-month low at 1.0448 then rallied after on taking profits operations. The price closed above the 200 simple moving average reflecting a weaker bearish sentiment which may lead bulls to take the initiative.
Currently, the price eyes a test of the bearish trendline originating from the July 27 high located at 1.0966. Hence, a daily close above 1.0789 could encourage some traders to rally the price towards 1.0981. That said, the resistance levels located at 1.0657 and 1.0873 should be considered.
On the other hand, a daily close below 1.0482 signals a stronger bearish momentum and opens the door for the price to fall towards 1.0199. However, the support level residing at 1.0364 should be watched closely.
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